3 ms·

Are you making the argument that Warren Buffet is not outstanding at investing? It’s just money made from insurance contracts and activist investing (which does

Are you making the argument that Warren Buffet is not outstanding at investing? It’s just money made from insurance contracts and activist investing (which doesn’t count as investing)?

candiodari 9y ago
I am making the argument that 1) the investing he does is not something you can do (it involves a lot more than just buying/selling shares, and without enough money you can't do it). So what does it matter if he's good at it ? What he does today and what he preaches are very different. 2) When it made the real difference to his wealth he did very, very different things than he is advising others today. He got very, very, very lucky when it mattered. The real lesson from Buffett's career is. First, work VERY hard to get to a few hundred thousand dollars, then spend a ridiculous proportion (~33%) of it to buy 3 businesses. Work very hard to make them successful. Threaten, steal, ... as necessary (this is what a hostile takeover is of course). Very, very, very hard. And he failed on one of these businesses. Three, use this success, as all billionaires did, Bill Gross, John Bogle, Kyle Bass, George Soros and indeed Warren Buffett, to convince your friends and family (doesn't work if you weren't born rich of course) to let you manage, say $100 million or so. Now play the hostile active investor game again, and again, and again. Buy yourself into management, and force management to put short-term stock price above all else BUT you can't "betray" your investment strategy (Buffett does that by holding back in his "central" investments, like KO). (I believe "central" is what he calls them) Now look up, and find that all those billionaires had VERY different investment strategies and you will see that it's not the investments, nor the investment strategies, but rather the fees and assets under management, that mattered. I mean investments can boost them, or slow them down, so they matter. The investment messages: Warren Buffett : value investing (cfr. Benjamin Graham) (Note: value investing has been shown to not match market performance, at this point for decades, but of course Buffett is already a billionaire activist investor. HE of course makes his money insuring large projects, a game only open to people with the deepest of pockets, (almost entirely) not through value investing) Bill Gross: governments will keep cheating the public on interest rates (he defended making a bet on secular stagnation and keep adding to that bet for 25 years ... and he was right) (Again, he's changed his mind, but he's already a billionnaire) George Soros: essentially same bet as Bill Gross. More sordid, in that he did not just wait for governments to screw up the economy but in several cases sabotaged government economic policies for profit. Kyle Bass: Also more or less the same bet as Bill Gross, but focused on the central bet that the US housing policy was going to crash in the 2008 crisis. He's famous for being too quick on the draw, and it's cost him. He's been right very often though. John Bogle: essentially bet that there is no signal in the market, except in obvious cases (ie. that even the very weak efficient market hypothesis is wrong and that the market moves as a whole, and you should invest with him). Never mind that if Bogle is correct then a rebalancing strategy should make much more profit than Bogle's products.

Are you making the argument that Warren Buffet is not outstanding at investing? It’s just money made from insurance contracts and activist investing (which doesn’t count as investing)?

candiodari 9y ago

I am making the argument that 1) the investing he does is not something you can do (it involves a lot more than just buying/selling shares, and without enough money you can't do it). So what does it matter if he's good at it ? What he does today and what he preaches are very different. 2) When it made the real difference to his wealth he did very, very different things than he is advising others today. He got very, very, very lucky when it mattered. The real lesson from Buffett's career is. First, work VERY hard to get to a few hundred thousand dollars, then spend a ridiculous proportion (~33%) of it to buy 3 businesses. Work very hard to make them successful. Threaten, steal, ... as necessary (this is what a hostile takeover is of course). Very, very, very hard. And he failed on one of these businesses. Three, use this success, as all billionaires did, Bill Gross, John Bogle, Kyle Bass, George Soros and indeed Warren Buffett, to convince your friends and family (doesn't work if you weren't born rich of course) to let you manage, say $100 million or so. Now play the hostile active investor game again, and again, and again. Buy yourself into management, and force management to put short-term stock price above all else BUT you can't "betray" your investment strategy (Buffett does that by holding back in his "central" investments, like KO). (I believe "central" is what he calls them) Now look up, and find that all those billionaires had VERY different investment strategies and you will see that it's not the investments, nor the investment strategies, but rather the fees and assets under management, that mattered. I mean investments can boost them, or slow them down, so they matter. The investment messages: Warren Buffett : value investing (cfr. Benjamin Graham) (Note: value investing has been shown to not match market performance, at this point for decades, but of course Buffett is already a billionaire activist investor. HE of course makes his money insuring large projects, a game only open to people with the deepest of pockets, (almost entirely) not through value investing) Bill Gross: governments will keep cheating the public on interest rates (he defended making a bet on secular stagnation and keep adding to that bet for 25 years ... and he was right) (Again, he's changed his mind, but he's already a billionnaire) George Soros: essentially same bet as Bill Gross. More sordid, in that he did not just wait for governments to screw up the economy but in several cases sabotaged government economic policies for profit. Kyle Bass: Also more or less the same bet as Bill Gross, but focused on the central bet that the US housing policy was going to crash in the 2008 crisis. He's famous for being too quick on the draw, and it's cost him. He's been right very often though. John Bogle: essentially bet that there is no signal in the market, except in obvious cases (ie. that even the very weak efficient market hypothesis is wrong and that the market moves as a whole, and you should invest with him). Never mind that if Bogle is correct then a rebalancing strategy should make much more profit than Bogle's products.